Vodafone pullout rallies Europe
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PARIS, France (Reuters) -- Relief that cellphone giant Vodafone had abandoned a takeover battle for AT&T Wireless sparked a rally that took European stocks to 19-month closing highs Tuesday.
Vodafone shares ended up 4.5 percent in twice the daily average volume on news it lost out to U.S. rival Cingular, which paid $41 billion in cash to buy AT&T Wireless and become America's top cellphone firm.
"The markets think it's a good thing that Vodafone hasn't overpaid, although in the long-term of course it does leave them with a strategic problem in the United States," said global equity strategist Patrik Schowitz at HSBC.
Speculation that Vodafone would turn to Vivendi to clinch control of its telecoms unit SFR pushed the media giant up 5.3 percent. Vodafone has long wanted to raise its 44-percent stake in SFR to become the controlling shareholder.
Also in media, global news and information provider Reuters Group jumped 18.4 percent to its highest level since June 2002 as it posted 2003 profit well above market expectations.
The FTSE Eurotop 300 index of pan-European blue chips ended 0.93 percent higher at 1,005.14 points, the highest close since July 10, 2002. In high volume, the number of gainers to losers was about two to one.
The narrower DJ Euro Stoxx 50 index rose 0.63 percent to 2,895.38 points.
A major driver of the market in recent weeks has been mergers and acquisitions activity.
"M&A activity is huge and shows that companies see value in the markets," said Orun Palit, fund manager at AIG Private Bank. "But first quarter results will be the trigger for a correction or a continuation of the rally."
Strategists said recent results -- mostly in-line with or above forecasts -- and further evidence of strong economic growth in the United States will support equity markets for now.
A top-performing bourse in Europe was London. The FTSE ended 1.21 percent higher at 4,461.50 points as Royal & Sun Alliance joined the party with gains of 6.7 percent.
Royal & Sun Alliance leapt to five-month highs amid talk house broker Cazenove had made positive comments about the firm.
France's CAC added 0.70 percent to 3,703.82 points, the Swiss SMI gained 0.23 percent to 5,871.7 and Germany's DAX was up 0.62 percent to 4,095.86.
Telecoms boost
Vodafone boosted the whole telecoms sector which ended up 2.8 percent at its highest level since January 28.
France Telecom rose 2.0 percent, British Telecom gained 2.4 percent, Spain's Telefonica was up 1.6 percent and Telecom Italia added 1.4 percent.
Deutsche Telekom advanced 3.7 percent after Dresdner Kleinwort Wasserstein upgraded its investment rating on the shares to "buy" from "add."
Elsewhere, Air France jumped 5.2 percent to its highest level since mid-2002 on news that its cost cutting plan would produce annual savings of one billion euros from 2007.
After the close, Air France posted a stronger-than-expected rise in third quarter profit and said it aimed to post an operating and net profit for the full year.
Dutch financial services group ING Groep added 2.0 percent on news it would close its insurance branch offices in Argentina and cut 650 jobs as part of its strategy to focus on core operations.
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Reuters. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.
